Economologist

Friday, June 3, 2011

I was talking with a reformed real estate developer yesterday and the conversation veered into a brainstorming session on how to reduce the incremental cost, to a buyer, of building in a new development. What if buyers could build their house one room at a time, giving the developer the core return on the entitlement and basic site improvement investments without the usual delays brought on by builder-driven risk (construction management, lot sales tied to floor plans and lot locations, etc.)? In other words, how can you increase the marginal utility of lot purchases to approach that of "spec-home" purchases (e.g. lot purchases as buy-and-hold investments that devalue the investments made by developers)?

Our idea hinged on the use of shipping containers as modular housing components. It works like this: The developer ensures that the CC&R docs include provisions to allow lot buyers to assemble permanent structures on-site that meet building codes, but that may not otherwise meet the full architectural standards for the community all at once. The buyer would contract with a turnkey housing unit "designer/manufacturer/installer" and pick the right initial set-up to meet their needs (say, a 2-container efficiency with a kitchenette and small bath, or an "outbuilding" with a 1-container efficiency). The prerequisite, of course, would be an Ikea-like housing store where the lot-buyer could take the site topo and development plan and build, pod-at-a-time, their dream home. Additionally, a design system that ensured complete interchangeability could allow a buyer to "re-purpose" pods already on the ground as they add-on and "re-model" their initial footprint.

I know that the key barrier to implementation of this idea pertains to the scale economies of pre-fabrication of the pod units to fit the site needs, but if it is well-designed and sufficiently modularized (and if key distribution partnerships are worked out in advance - rail, freight, on-site-placement), much of the final "interconnection and assembly" could be completely DIY - just like getting an Ikea bed delivered in 6 boxes. In many ways, this is something of a revival of the old Sears-Roebuck or Aladdin model of kit or catalog houses, like the one my Grandfather, George Gullette, put up in Raleigh, NC.

Imagine, then, a 300-lot development on a spectacular site with only the basic streets and community amenities in place. And then, over time, each lot starts sprouting a little bit of housing, one room at a time.

Wednesday, February 3, 2010

I've had several conversations with many business leaders who insist that all environmental policy, from direct regulation of effluent to pricing mechanisms that stimulate market-based trading schemes, constitutes an inefficient distortion of an otherwise efficient marketplace. This line of reasoning seems to posit that most, if not all, environmental "problems" are best solved by markets. More on this in a moment, but for now, I think it's interesting to note that "general" policies that define goals broadly seem to be more effective than specific policies. One case in point.